Are you about starting an Amway company? If YES, here is a detailed sample Amway business plan template & FREE feasibility report. Amway over the years have grown to become one of the world’s biggest direct selling companies by providing any willing entrepreneur with the platform to have a business of their own.
Known as a front – runner in the united states multilevel marketing (MLM) industry, Amway Corporation manufactures and sells its own products as well as brand name products from other companies through a network of three million independent distributors worldwide.
But unlike all other MLM firms, Amway provides a broad selection of items, from cleaning products, cosmetics, vitamins to travel services, discount car purchases, and catalog merchandise. The company’s manufacturing facilities include a 3.5-million-square-foot production plant in Ada, Michigan, as well as plants in California, South Korea, and China.
Meanwhile, Amway products are delivered to distributors in the United States and the Caribbean region through 12 Amway Service Centers.
A Sample Amway Business Plan Template
1. Industry Overview
Before going further, it’s pertinent you first understand about multi-level marketing. The Multi-level marketing scheme is a model that can be used to sell goods along with the services of the company with the help of promoters and partners of the company. The total earnings which are collected from the entire sale are distributed amongst the key players. So, in the process, the seller is not the only owner of the profit accumulated from the sale.
There is also an involvement of the step where the associates will have to get paid with the help of a proper multi-level system, and there are commissions provided to these associates and promoters as well. Multi-level marketing, popularly termed as Network or Referral Marketing, has always been in the news due to its seemingly contentious scheme of marketing.
Amway Business Owner (ABO) plays a major role in channelizing the business at a different level. ABOs let the Amway products reach the customers. With the Amway Business model, the associates will be able to sell the products of the company directly and also they can make sure that they help in the promotion of the products as well. This will create different levels of people working towards one common goal.
Note that the functioning of the Amway Business Model is based upon the performance of ABOs (Amway Business Owners). So, for evaluating their performance, Amway has a term known as Product Value, i.e. PV and Group Product Value, i.e. GPV. PV is actually the MRP of the product, and commissions of ABOs are decided as per the PV of that product.
Howbeit, in the hierarchy, the top-level ABO will get the product from the company at a discounted price based upon their commission, so he or she can sell that to others by that retail margin. In addition, ABOs get the bonuses as per their performances, plus growth incentives are offered to them, so they stay motivated in making the chain to channelize the multi-level marketing program of the company.
The business model of Amway is not really that difficult to understand. There are certain roles that ABOs will be playing. They can either act as the distributor of the company, or they will be playing the role of the recruits who are recruited by the distributor.
You will also be able to easily recruit the people in order to do the job for you in the best way. So, it seems quite obvious that the Amway Business model is one of the best models from the other models of businesses.
2. Executive Summary
Amway is an American company which deals in health, beauty, and home care commodities. At Amway Chicago, which is literally an Amway product store in the heart of Chicago, we will still offer a complete line of Amway products.
Our product prices will be quite stable since we will be buying direct from Amway Corporation. Another beneficial features of this relationship which is of significant value to us is the willingness of Amway Corporation to allow our store in Chicago to place orders as small as $160. The Amway Model is acutely infiltrated into the market, that is what makes it unlike the others and appears as a sham to many.
This is because the networking needs to keep on increasing for better results – more and more people are to be made to join hands and more and more people are to be talked to. At Amway Chicago, we have made plans and drafted result oriented strategies to be able to attract consumers who will in turn become distributors
Amway Chicago, just like Amway Corporation, will offer an efficient and effective distribution model where the products are purchased direct from the Corporation ensuring the highest quality and low prices. They are then sold direct to the consumer.
MLM businesses are often confused with pyramid schemes which are illegal in the U.S. Pyramid schemes are business forms that offer compensation specifically for the recruitment of new sellers. People are promised economic rewards for the more people they recruit, independent of what these people sell.
Herein lies the crucial distinction that regulatory authorities analyze when determining if a business is a pyramid scheme: the way compensation is rewarded. If it is based on recruitment, it is presumed illegal. At Amway Chicago, we will only compensate distributors for sales, an effective and efficient sales and distribution system.
Amway Chicago is an exciting new business which will leverage individuals’ needs for good and quality products and the ability to make money while sharing this need with friends and colleagues. By carefully using the efficient multi-level marketing business model, we will quickly generate sustainable revenue.
Sales forecasts indicate that sales for year two and three respectively will be $1,200,000 and $2,340,000. Net profit for the same years will reach 6.19 percent and 9.81 percent.
3. Our Products and Services
Amway Corporation is known to manufacture and sell a wide variety of products that are of top-notch quality which helps the company in making good money. At Amway Chicago, we will still offer a complete line of Amway products to the people of Chicago. These products include;
- Household Cleaners
- Original multi-purpose cleaning product LOC
- SA8 laundry detergent
- Dish Drops dish-washing liquid
- Health and Beauty
- Artistry
- Satinique
- Hymm
- Body Series
- Glister
- Miskin
- Nutrilite
- Nutriway
- eSpring
- Atmosphere and iCook as well as XL and XS Energy drinks
4. Our Mission and Vision Statement
- Our vision at Amway Chicago is to grow an organization that compensates individuals for sales made by other people that they recruit, while also satisfying the need for Amway products all over Chicago.
- At Amway Chicago, our mission is to build of a environmentally friendly distribution company that uses grassroots and network marketing techniques to sell the product and make a meaningful contribution to the environment. Earthly Clean exists to support its members and to support the environment.
Our Business Structure
In Amway business functioning, Amway Business Owners have the right to sell the products at different levels. The hierarchy is like: Amway – ABO1 – ABO2 – ABO3 – Customer. ABO gives a fix commission to ABOs, plus income of 1st ABO added when he or she adds the second ABO.
This hierarchy continues, and in some way, the commission gets added in the account of every ABO. We at Amway Chicago, with our salespeople who are a part of the company, will be working down the entire hierarchy. We will be selling all the products from the list and to the distributors that are working in the retail markets. We plan to do this with the help of some great promotional marketing options and schemes.
Our distributors who will be entrusted with all sales methods will also get to recruit some other new dispensers that they want around the entire hierarchy which can be further helped when it comes to the expansion of the network in the best way. We at Amway Chicago also plan to recruit employees to help in the running of our open store.
Leveraging an effective interview process designed to staff our store with highly qualified people for each position, we will also create a path to let them join the network. Background checks will be utilized for designated positions. Recruiting efforts will always center on referrals. These roles include:
- Store Operator
- Cashier
- Information officer
- Department managers
- Store manager
- Servers
- Cleaner
5. Job Roles and Responsibilities
Store Operator
- Increases management’s effectiveness by recruiting, selecting, orienting, training, coaching, counselling, and disciplining managers; communicating values, strategies, and objectives; assigning accountabilities; planning, monitoring, and appraising job results; developing incentives; developing a climate for offering information and opinions; providing educational opportunities.
- Creating, communicating, and implementing the store’s vision, mission, and overall direction – i.e. leading the development and implementation of the overall store’s strategy.
- Tasked with fixing prices and signing business deals
- Tasked with providing direction for the business
- Tasked with signing checks and documents on behalf of the Amway Chicago
Financial Officer
- Tasked with preparing financial reports, budgets, and financial statements for the store
- Provides managements with financial analyses, development budgets, and accounting reports
- Tasked with financial forecasting and risks analysis.
- Performs cash management, general ledger accounting, and financial reporting
- Tasked with developing and managing financial systems and policies
- Tasked with administering payrolls
- Ensures compliance with taxation legislation
- Handles all financial transactions for the store
- Serves as internal auditor for the store
Information officer
- Provide technological guidance within the store.
- Supervise information system and communications network.
- Develop and implement a customer service platform to serve the store in every aspect.
- Design, establish, and maintain a network infrastructure for local and wide area connectivity and remote access.
- Consult with administration, department managers, and manufacturing representatives to exchange information, present new approaches, and to discuss equipment/system changes.
- Oversee Internet and computer operations.
- Assess and anticipate technology projects and recommend appropriate action and resources.
- Establish and direct the strategic and tactical goals, policies, and procedures for the information technology department.
- Propose hardware/software solutions to accomplish Amway Chicago’s business objectives.
- Identify user needs and resolve problems.
Store manager
- Maintains receiving, warehousing, and distribution operations by initiating, coordinating, and enforcing program, operational, and personnel policies and procedures.
- Complies with federal, state, and local warehousing, material handling, and shipping requirements by studying existing and new legislation; enforcing adherence to requirements; advising management on needed actions.
- Safeguards store operations and contents by establishing and monitoring security procedures and protocols.
- Controls inventory levels by conducting physical counts; reconciling with data storage system.
- Maintains physical condition of store by planning and implementing new design layouts; inspecting equipment; issuing work orders for repair and requisitions for replacement.
- Completes store operational requirements by scheduling and assigning employees; following up on work results.
- Maintains store staff by recruiting, selecting, orienting, and training employees.
- Maintains store staff job results by coaching, counselling, and disciplining employees; planning, monitoring, and appraising job results.
Servers
- Provides the client with a personalized customer service experience of the highest level
- Through interaction with customers on the phone, uses every opportunity to build client’s interest in the Amway Chicago ’s products
- Takes care of administrative duties assigned by the operator in an effective and timely manner
- Consistently stays abreast of any new information on Amway Chicago, promotional campaigns etc. to makes sure accurate and helpful information is supplied to customers when they make enquiries
Cleaner
- Tasked with cleaning the store at all times
- Makes sure that toiletries and supplies don’t run out of stock
- Any other duty as assigned by the operator.
6. SWOT Analysis
Just like Amway Corporation, our goal at Amway Chicago is to grow a more efficient marketing machine that does away with the inefficient traditional distribution systems. We’ve gone the length of analyzing our chances in the Chicago market and have properly stated our SWOT analysis. Clearly summarized below is the result of our SWOT Analysis;
Strengths
- All our products are of high quality and their demand in our Chicago market has peaked.
- We will only recruit experienced salespersons to assist in the sales of the products.
- Build the company on a solid basis of integrity.
Weaknesses
- Recruiting and retaining quality employees
- Tight margins will allow little wiggle room for error
Opportunities
- Little barriers to entry allows for immediate business opportunities
- New and viable market
Threats
- Multi Level Marketing has always been in the news due to its seemingly contentious scheme of marketing.
- Rising operating costs
- Building/maintaining sales volume
- Parent Club legal issues
7. MARKET ANALYSIS
8. Our Target Market
The reality of Amway’s networking business model is that besides the retail end customer, the very salespersons recruited or sponsored by the ones higher up in the network also act as end-user retail customers for Amway as they are required to pay an entry fee to join the network.
Aside that, we at Amway Chicago have identified two distinct type of customers for our Chicago store. The first customer is the end user of Amway products. These are people who have needs for health, beauty, and home care commodities. The second customer group will be a good number of people from the first group with an interest in becoming distributors of Amway products.
These two customer segments are very much attractive because they represent people who are most likely to be consumers of all Amway manufactured supplies. The distributors will be individual consumers who have an even stronger conviction and belief in the products as well as have the time to sell the products and find potential people to recruit into the distribution effort.
To be a distributor does not require a huge sacrifice of time, the majority of distributors will have full-time jobs in addition to marketing Amway. This makes the job of distributor all that more attractive, the person is able to adjust their already existing job with another source of income.
- Our Competitive Advantage
From our due diligence, we at Amway Chicago have been able to properly identify concrete competitive advantages that will help us succeed.
- Quality Products
Every product sold at/by Amway Chicago are manufactured and supplied by Amway Corporation. This offers us the unique platform to sell very competitive products that meet the needs of the market.
- Stable Pricing
At Amway Chicago, we will be able to offer great pricing because all our products are sourced directly from Amway Corporation. Although Amway Corporation pays out sale commissions to the various layers of distributors, this grassroots distribution model is still more efficient than the traditional distribution channel, keeping prices competitive.
- Favorable Business Model
Unlike other businesses in the industry, instead of profits going to a large corporation, all profits are dispersed among the user distributors that assist Amway. This arrangement is quite rare, and attractive for the targeted customer segment.
9. SALES AND MARKETING STRATEGY
At Amway Chicago, our marketing strategy will focus on the need to generate visibility for Amway as a company that offers health, beauty and home care commodities. Our primary marketing strategy will be based on grassroots networking. We believe that this strategy is most effective when the person selling the products knows the products and is passionate about what they are selling.
This is specifically why we chose to sell Amway products. We understand that in the MLM industry, networking is the key to increased visibility and distribution. Networking will take place in a number of venues including: the traditional work environment, social organizations, religious organizations, and other gatherings/situations that bring people together.
Distributors are expected to set up a meeting with the prospective person (someone they generally already know and have some sort of relationship with), show them the product catalog and provides them with samples.
Immediately the client must have used the products and impressed by them, another meeting can be scheduled to determine if the person is interested in making a purchase, and/or is interested in an additional source of income selling Amway products.
10. Sales Forecast
At Amway Chicago, we will be tracking both the sales to the individual consumers and the revenue received through commissions from sales from the various distributors. Our sales forecast indicates that initially the bulk of revenue will be from sales to the individual customers.
But as time progresses and more distributors are secured, the amount of revenue from the distributors will increase. We at Amway Chicago have adopted a reasonably conservative sales forecast. We estimate that our total first year sales should reach $1,200,000. Our second year will see sales increase to $2,340,000. The third year, with the addition of such a significant number of outlets, we will see sales increase to $5,192,440.
11. Publicity and Advertising Strategy
At Amway Chicago, our plan is to gather enough brand awareness to leverage the product line into other regions and gain inquiries from potential investors. To achieve this goal to expand and grow, we plan to do the following;
- Amway Chicago will spend $1,450 per month on Public relation services for the next year intended to build awareness of editors and product information insertions, reviews, etc.
- Amway Chicago will also spend $440 per month concentrating on drive time Radio advertising. We plan to experiment with different stations, keeping careful track of results. As with the school fundraising program, we expect the stand and signage to be a substantial portion of our advertising.
- List our business on local directories
- Attend relevant international and local health, finance and business expos, seminars, and business fairs et al
- Leverage on the internet to promote our business
- Engage direct marketing approach
- Encourage word of mouth marketing from loyal and satisfied clients
Sources of Income
With the help of the products and services that are provided by Amway Corporation, we at Amway Chicago will be able generate encouraging revenue. Amway Corporation manufactures more than 450 products, and via its MLM model, it sells those products all across the globe, generating a good amount of money.
Amway practices direct selling which is ‘A method of selling goods directly to the consumer by an independent Distributor. A Distributor can then introduce further Distributors and generate income from retail profits supplemented by bonus payments based upon the total sales of the group built by a Distributor”. We at Amway Chicago will generate income through:
- The retailing of Amway goods to consumers. Retail margins (mark-ups) on the basic wholesale price represent income to the selling distributor.
- Additional performance and leadership bonuses, paid on the volume of personal business and the business volume we plan to introduce into the business. Various levels of leadership bonuses, dependent upon the overall size and shape of the business, paid on achieving different levels of business performance.
12. Our Pricing Strategy
Amway as a company maintains a stable price for all products. With the Amway Business models, all associates will be able to sell the products of the company directly and also they can make sure that they help in the promotion of the products as well. This will create different levels of people working towards one common goal, and that is to make sure that the company of Amway is able to make a lot of money.
Meanwhile, the functioning of the Amway Business Model is based upon the performance of ABOs (Amway Business Owners). So, for evaluating their performance, Amway has a term known as Product Value, i.e. PV and Group Product Value, i.e. GPV. PV is actually the MRP of the product, and commissions of ABOs are decided as per the PV of that product.
So, in the hierarchy, the top-level ABO will get the product from the company at a discounted price based upon their commission, so he or she can sell that to other by that retail margin. In addition, ABOs get the bonuses as per their performances, plus growth incentives are offered to them, so they stay motivated in making the chain to channelize the multi-level marketing program of the company.
- Payment Options
All our payment options at Amway Chicago will be inclusive and acceptable because we understand greatly that different people prefer different payment options as it suits them. Here are the payment options that we will make available to our clients;
- Payment by cash
- Payment via Point of Sale (POS) Machine
- Payment via online bank transfer (online payment portal)
- Payment via Mobile money
We have also chosen banking platforms that will help us achieve our plans with little or no issues. Our bank account numbers will be made available on our website and promotional materials to clients who may want to deposit cash or make online transfer for our products charge.
13. Startup Expenditure (Budget)
To get started with Amway, Individual Business Owners need to pay a $62 registration fee. This is direct profit for the company, but it also comes with a 100% satisfaction guarantee for the first 90 days. The fee provides a welcome kit that helps to get new representatives up-to-date with the various product lines that are offered.
Those who are just starting are also recommended to purchase an $83.90 product kit so the items that Amway sells can be sampled and sold with authenticity. The product kit contains $160 worth of full-sized Amway products to try. Meanwhile, we at Amway Chicago have incurred the following expenses for the launching of our store:
- Storage space: This will be used for the storage of product inventory.
- Service provider fees: We’ve incurred both accountant and attorney fees in the setting up of the business. The accountant will set up the Linton accounting system and the attorney will develop and register the business formation as well as draft some sale agreements for distributors.
- Computer system: The computer system will be used for correspondence, accounting purposes as well as to develop marketing and sales information. The system will include a laptop computer, printer, fax/scanner, and a broadband Internet connection. Earthly Clean will use Microsoft Office and Linton Accounting as their preferred software.
- Assorted types of paper and stationery: Personalized with a logo, return addresses, etc. for catalogs, and brochures.
- Assorted office furniture and accessories
Generating Funding/Start up Capital for Amway Chicago
Amway Chicago is a Store owned by Martha Flinch and Damson Cone. Both have been with Amway Corporation for over 10 years and understand the visions and values of the company. At Amway Chicago, we hope to raise our startup fund through the following ways;
- Generate part of the startup capital from personal savings
- Source for soft loans from friends and family
- Generate fund from angel investors
Note: The owners of the company are willing to invest $200,000 to start up Amway Chicago.
14. Sustainability and Expansion Strategy
The key to a successful business with Amway has to be in the building of the downstream. When working appropriately, the Amway business model is one that can work. The tiered levels of sales representatives in each up line can all help us and our distributors succeed.
The unfortunate fact, however, is that many Amway representatives get involved thinking that they can start their own business for a small price and very little overhead. The reality is that Amway is just like any other business opportunity, but with a small twist – sales reps don’t actually have their own business.
For those in Chicago that are good at sales and love to be social with people, we will offer them a tremendous opportunity for success. The underlying fact is that the Amway Business Model is not a scam. Just that it is not really a pyramid model of business – all it relies on is a granted hierarchy of partakers who purchase, retail and further spread out this sequence to earn more proceed-fractions, which is more of a network than a pyramid.
At Amway Chicago, our sales strategy will emphasize our high quality products and 100% customer satisfaction. We believe that by combining these two benefits, consumers are able to try the available products risk free. This provides them with the opportunity to test them out and determine if they are as good as they claim to be. Once the consumer has recognized the outstanding quality that Amway offers, the option of becoming a distributor becomes more attractive.
If the consumer truly believes in the product, then it becomes that much easier to convince them that there is an excellent opportunity available that allows them to sell a product that they believe in, obtain an additional source of revenue, and make a positive impact on the environment. All of this will be done on a grassroots, one-to-one level.
Also, retailing Amway products enables us provide immediate financial incentive rewards to our distributors. Direct selling involves sales people showing and demonstrating products to obtain orders. The objective involves matching consumer needs with the product.
The better the match, the more lasting the potential for the relationship between the seller and the buyer. The selling process is aided by Amway’s retail strategy to provide high quality, readily purchasable items with a good environmental positioning, offering consumers good value for money.
As with all direct selling activities, the process involves two-way communication and this can be time-consuming. Business success and the resulting financial results are a direct consequence of effort, commitment and personal group motivation.
Personal contact between distributors at one-to-one or group meetings provides the opportunity for individuals to discuss strategies, difficulties, levels of involvement and plans for the future. The income objectives and individual targets may be determined by each distributor based upon what he or she wants to earn.
Checklist /Milestone
- Business Name Availability Check: Completed
- Business Incorporation: Completed
- Opening of Corporate Bank Accounts: Completed
- Opening Online Payment Platforms: Completed
- Application and Obtaining Tax Payer’s ID: In Progress
- Application for business license and permit: Completed
- Purchase of Insurance for the Business: Completed
- Conducting feasibility studies: Completed
- Leasing, renovating and equipping our store: Completed
- Generating part of the start – up capital from the founder: Completed
- Applications for Loan from our Bankers: In Progress
- writing of business plan: Completed
- Drafting of Employee’s Handbook: Completed
- Drafting of Contract Documents: In Progress
- Design of The Company’s Logo: Completed
- Printing of Packaging/Promotional Materials: Completed
- Recruitment of employees: In Progress
- Purchase of software applications, furniture, office equipment, electronic appliances and store facelift: In progress
- Creating Official Website for the Company: In Progress
- Creating Awareness for the business (Business PR): In Progress
- Health and Safety and Fire Safety Arrangement: In Progress
- Establishing business relationship with banks, financial lending institutions, vendors and key players in the industry: In Progress